Introduction to brands
Take a look at the list below that shows the world’s top 10 brands in 2002 (as measured by value):
{Rank Brand Value ($ billions)}
1 Coca-Cola ($69.6)
2 Microsoft ($64.1)
3 IBM ($51.2)
4 GE ($41.3): General Electric
5 Intel ($30.9)
6 Nokia ($30.0)
7 Disney ($29.3)
8 McDonalds ($26.4)
9 Marlboro ($24.2):making cigarette
10 Mercedes ($21.0)
Source: Interbrand; JP Morgan Chase, 2002
Why do companies such as Coca-Cola, Microsoft, IBM and Disney seem to achieve global marketing success
so easily? Why does it seem such an effort for others?
Why do we, as consumers, feel loyal to such brands that the mere sight of their logo has us reaching into
our pockets to buy their products?
The meaning of brands
Brands are a means of differentiating a company’s products and services from those of its competitors.
There is plenty of evidence to prove that customers will pay a substantial price premium for a good brand
and remain loyal to that brand. It is important, therefore, to understand what brands are and why they
are important.
Macdonald sums this up nicely in the following quote emphasising the importance of brands:
“…it is not factories that make profits, but relationships with customers, and it is company and brand
names which secure those relationships”
Businesses that invest in and sustain leading brands prosper whereas those that fail are left to fight for the
lower profits available in commodity markets.
What is a brand?
One definition of a brand is as follows:
“A name, term, sign, symbol or design, or a combination of these, that is intended to identify the goods
and services of one business or group of businesses and to differentiate them from those of
competitors”.
Interbrand - a leading branding consultancy - define a brand in this way:
“A mixture of tangible and intangible attributes symbolised in a trademark, which, if properly managed,
creates influence and generates value”.
Three other important terms relating to brands should be defined at this stage:
Brand equity
“Brand equity” refers to the value of a brand. Brand equity is based on the extent to which the brand has
high brand loyalty, name awareness, perceived quality and strong product associations. Brand equity also
includes other “intangible” assets such as patents, trademarks and channel relationships.
Brand image
“Brand image” refers to the set of beliefs that customers hold about a particular brand. These are
important to develop well since a negative brand image can be very difficult to shake off.
Brand extension
“Brand extension” refers to the use of a successful brand name to launch a new or modified product in a
new market. Virgin is perhaps the best example of how brand extension can be applied into quite diverse
and distinct markets.
Brands and products
Brands are rarely developed in isolation. They normally fall within a business’ product line or product
group.
A product line is a group of brands that are closely related in terms of their functions and the benefits
they provide. A good example would be the range of desktop and laptop computers manufactured by Dell.
A product mix relates to the total set of brands marketed by a business. A product mix could, therefore,
contain several or many product lines. The width of the product mix can be measured by the number of
product lines that a business offers.
For a good example, visit the web site of Hewlett-Packard (“HP”). HP has a broad product mix that covers
many segments of the personal and business computing market. How many separate product lines can you
spot from their web site?
Managing brands is a key part of the product strategy of any business, particularly those operating in
highly competitive consumer markets.
